Smith Runs a Software-Design Business

question 130

Multiple Choice

Smith runs a software-design business.He needed someone to handle some product demonstrations,so he hired Janet to do this work.In the employment contract,Smith insisted that Janet promise that,if she left the firm,she would not work for Smith's competitors within a stated period of time and within a stated geographical region.If Janet now wishes to leave the job,indicate the statement that accurately describes the likely effect of her promise.

• A)Such promises are in restraint of trade and thus the courts invariably hold them to be invalid.
• B)If the court thinks that such a promise is reasonable between the employer and employee and that the public interest will not be damaged,it will enforce it.
• C)Such promises are valid only if given under seal.
• D)Such promises are invariably held to be valid when they are part of the terms of employment and thus are given in consideration for getting the job.
• E)If the court holds such a promise to be invalid,the whole employment contract is necessarily void as well.

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Definitions:

Community Rating

An insurance pricing strategy which sets premiums based on the collective risk profile of a community or geographic area rather than individual risk factors, often used in healthcare insurance.

Adverse Selection

A situation in which asymmetric information leads to a selection of undesirable outcomes, such as in insurance markets.

Moral Hazard

The situation where one party is more likely to take risks because the consequences of those risks will be felt by another party.

Uninsured

Individuals or entities lacking insurance coverage, exposing them to potential financial loss from unforeseen events or health issues.